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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended October 31, 2002
Commission File Number 0-26230
WESTERN POWER & EQUIPMENT CORP.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 91-1688446
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) I.D. number)
6407-B N.E. 117th Avenue, Vancouver, WA 98662
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no.: 360-253-2346
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Title of Class Number of shares
Common Stock Outstanding
(par value $.001 per share) 4,003,162
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WESTERN POWER & EQUIPMENT CORP.
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Balance Sheets
October 31, 2002 (Unaudited) and July 31, 2002............... 1
Consolidated Statements of Operations
Three months ended October 31, 2002 (Unaudited)
and October 31, 2001 (Unaudited)............................. 2
Consolidated Statements of Cash Flows
Three months ended October 31, 2002 (Unaudited)
and October 31, 2001 (Unaudited)............................. 3
Notes to Consolidated Financial Statements..................... 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Operating Results..... 7-9
Item 3. Quantitative & Qualitative Disclosures about
Market Risk................................... 9
Item 4. Evaluation of Disclosure Controls and Procedures....... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................... N/A
Item 2. Changes in Securities.................................. N/A
Item 3. Defaults Upon Senior Securities........................ 11
Item 4. Submission of Matters to a Vote of Security
Holders....................................... N/A
Item 5. Other Information...................................... 11
Item 6. Exhibits and Reports on Form 8-K....................... 11
SIGNATURES .............................................. 12
CERTIFICATIONS .............................................. 13-14
ITEM 1. FINANCIAL STATEMENTS
--------------------
WESTERN POWER & EQUIPMENT CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
October 31, July 31,
2002 2002
-------- --------
(Unaudited)
ASSETS (PLEDGED)
----------------
Current assets:
Cash and cash equivalents ........................... $ 5 $ 5
Accounts receivable, less allowance for doubtful
accounts of $743 and $646, respectively ........... 6,965 10,304
Inventories ......................................... 26,309 26,915
Prepaid expenses .................................... 126 48
-------- --------
Total current assets ........................... 33,405 37,272
Fixed assets:
Property, plant and equipment (net) ................. 3,326 3,434
Rental equipment fleet (net) ........................ 16,413 18,696
-------- --------
Total fixed assets ............................. 19,739 22,130
Other assets ............................................ 174 174
-------- --------
Total assets ............................................ $ 53,318 $ 59,576
======== ========
LIABILITIES & STOCKHOLDERS' DEFICIT
-----------------------------------
Current liabilities:
Borrowings under floor plan financing ............... $ 8,768 $ 10,974
Short-term borrowings ............................... 37,278 41,322
Convertible debt .................................... 179 218
Accounts payable and accrued expenses ............... 8,394 8,585
Accrued payroll and vacation ........................ 613 659
Capital lease obligation ............................ 16 26
-------- --------
Total current liabilities ....................... 55,248 61,784
Capital lease obligation ................................ 928 928
-------- --------
Total long-term liabilities ....................... 928 928
-------- --------
Total liabilities ....................................... 56,176 62,712
-------- --------
Stockholders' deficit:
Preferred stock-10,000,000 shares authorized;
none issued and outstanding ....................... -- --
Common stock-$.001 par value; 20,000,000 shares
authorized; 4,003,162 issued and outstanding ...... 4 4
Additional paid-in capital .......................... 16,025 16,025
Accumulated deficit ................................. (18,043) (18,322)
Less common stock in treasury, at cost
(130,300 shares) .................................. (844) (844)
-------- --------
Total stockholders' deficit ..................... (2,858) (3,136)
-------- --------
Total liabilities and stockholders' deficit ............. $ 53,318 $ 59,576
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
1
WESTERN POWER & EQUIPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
Three Months Ended
October 31,
2002 2001
-------- --------
Net revenue ..................................... $ 24,094 $ 28,500
Cost of revenues (includes depreciation of
$1,066 and $1,325, respectively) ............. 20,633 24,383
-------- --------
Gross profit .................................... 3,461 4,117
Selling, general and administrative expenses .... 2,290 2,570
-------- --------
Operating income ................................ 1,171 1,547
Other income (expense):
Interest expense ............................ (945) (1,258)
Other income ................................ 66 80
-------- --------
Income before income tax provision .............. 292 370
Income tax provision ............................ 13 12
-------- --------
Net income ...................................... $ 279 $ 358
======== ========
Average outstanding common shares for
basic and diluted earnings per share .......... 4,003 3,403
======== ========
Basic and diluted earnings per common share ..... $ 0.07 $ 0.11
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
2
WESTERN POWER & EQUIPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
Three Months Ended
October 31,
2002 2001
------- -------
Cash flows from operating activities:
Net income ..................................... $ 279 $ 358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................... 2,131 2,634
Amortization ................................... -0- 31
Gain on sale of fixed assets and
rental equipment .......................... (157) (222)
Changes in assets and liabilities:
Accounts receivable ........................ 3,339 1,549
Inventories ................................ (293) 2,478
Prepaid expenses ........................... (78) 100
Accounts payable ........................... (1,655) (1,903)
Accrued payroll and vacation ............... (46) 86
Other accrued liabilities .................. 1,462 (307)
Income taxes receivable/payable ............ 2 2
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Net cash provided by operating activities .......... 4,984 4,806
------- -------
Cash flows from investing activities:
Purchase of fixed assets ....................... (26) (47)
Purchases of rental equipment .................. -0- (1,694)
Proceeds on sale of fixed assets ............... 5 187
Proceeds on sale of rental equipment ........... 1,338 1,249
Purchase of other assets ....................... -0- 10
------- -------
Net cash provided by (used in)
investing activities ............................. 1,317 (295)
------- -------
Cash flows from financing activities:
Principal payments on capital leases ........... (10) (4)
Payments on inventory floor-plan financing ..... (2,208) (807)
Payments on short-term financing ............... (4,044) (4,143)
Convertible debt ............................... (39) -0-
------- -------
Net cash used in financing activities .............. (6,301) (4,954)
------- -------
Decrease in cash and cash equivalents .............. 0 (443)
Cash and cash equivalents at beginning of
period ............................................ 5 494
------- -------
Cash and cash equivalents at end of period ......... $ 5 $ 51
======= =======
The accompanying notes are an integral part of
these consolidated financial statements.
3
Western Power & Equipment Corp.
Notes to Consolidated Financial Statements
(Dollars in thousands)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited and in the
opinion of management contain all the adjustments (consisting of those of a
normal recurring nature) considered necessary to present fairly the consolidated
financial position and the consolidated results of operations and cash flows for
the periods presented in conformity with accounting principles generally
accepted in the United States applicable to interim periods. This report should
be read in conjunction with the Company's consolidated financial statements
included in the Annual Report on Form 10-K for the fiscal year ended July 31,
2002 filed with the Securities and Exchange Commission.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Company has recurring losses and is currently in default on its short-term
borrowing facility as discussed in Note 4 of these consolidated financial
statements, both of which create substantial doubt about the Company's ability
to continue as a going concern. The accompanying unaudited consolidated
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
2. INVENTORIES
Inventories consist of the following:
October 31, July 31,
2002 2002
------- -------
Equipment (net of reserve allowances of
$7,007 and $7,770, respectively):
New $12,930 $13,834
Used 6,241 5,915
Parts (net of reserve allowance of $363
and $286, respectively) 7,138 7,166
------- -------
$26,309 $26,915
======= =======
3. FIXED ASSETS
Fixed assets consist of the following:
October 31, July 31,
2002 2002
------- -------
Operating property, plant and equipment:
Land $ 522 $ 522
Buildings 1,749 1,749
Machinery and equipment 3,139 3,137
Office furniture and fixtures 2,220 2,220
Computer hardware and software 1,506 1,501
Vehicles 1,427 1,406
Leasehold improvements 960 960
------- -------
11,523 11,495
Less: accumulated depreciation 8,197 8,061
------- -------
Property, plant, and equipment (net) $ 3,326 $ 3,434
======= =======
Rental equipment fleet $23,981 $25,833
Less: accumulated depreciation 7,568 7,137
------- -------
Rental equipment (net) $16,413 $18,696
======= =======
4
4. SHORT-TERM BORROWINGS
As of October 31, 2000, the Company and GE Commercial Distribution
Finance ("GE"), formerly known as Deutsche Financial Services, signed
an amendment to the existing loan and security agreement. The amendment
waived all prior defaults under the agreement, and established revised
financial covenants to be measured at the end of the Company's second
and fourth quarters. In addition, the amendment included periodic
mandatory reductions in the credit limit. The amended GE facility
matured on December 28, 2001, is a floating rate facility based on
prime with rates between 0.75% under prime to 2.25% over prime,
depending on the amount of total debt leverage of the Company. On June
21, 2002, the Company entered into a Forbearance Agreement with GE
under terms in which GE extended the due date until December 31, 2002,
raised the interest rate to prime plus 4% while the Company is in
default, and required the Company to pay a $45,000 fee to GE for the
forbearance. In addition, under the terms of the Forbearance Agreement,
the Company is required to meet certain financial covenants and meet
certain debt reduction schedules.
As of October 31, 2002, the Company was in technical default of the
financial covenants in the GE Forbearance Agreement. The Company has
not received a waiver of such defaults from GE, and although GE has not
called the loan, there is no guarantee that it will not do so in the
future. The Company currently is in negotiations with GE to extend or
renew the credit facility beyond its current expiration of December 28,
2001, as extended to December 31, 2002 under the Forbearance Agreement.
The Company believes that it can reach an agreement with GE to further
extend or renew the agreement on reasonably acceptable terms. However,
in the event that the Company cannot reach a reasonably acceptable
agreement to extend or renew the current GE credit facility, GE is
entitled to demand repayment of the entire outstanding balance at any
time. In such case, the Company would be unable to repay the entire GE
outstanding balance. There can be no assurance that the Company will be
able to successfully negotiate an acceptable extension or renewal of
the existing GE credit facility or that GE will not call the balance
due at any time.
5. SEGMENT INFORMATION.
For the purpose of providing segment information, management believes
that all of the Company's operations consist of one segment. However,
the Company evaluates performance based on revenue and gross margin of
three distinct business components. Revenue and gross margin by
component are summarized as follows:
Business Component Three Months Ended
Net Revenues October 31,
2002 2001
------------------ ------- -------
Equipment Sales $15,117 $18,878
Equipment Rental 1,820 1,695
Product Support 7,157 7,927
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Total $24,094 $28,500
======= =======
5
Business Component Three Months Ended
Gross Margins October 31,
2002 2001
------------------ ------- -------
Equipment Sales $ 1,456 $ 2,162
Equipment Rental 605 555
Product Support 1,400 1,400
------- -------
Total $ 3,461 $ 4,117
======= =======
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
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LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Form 10-Q. Information included herein relating to projected growth and future
results and events constitutes forward-looking statements. Actual results in
future periods may differ materially from the forward-looking statements due to
a number of risks and uncertainties, including but not limited to fluctuations
in the construction, agricultural, and industrial sectors; the success of the
Company's restructuring and cost reduction plans; the success of the Company's
equipment rental business; rental industry conditions and competitors;
competitive pricing; the Company's relationship with its suppliers; relations
with the Company's employees; the Company's ability to manage its operating
costs; the continued availability of financing; the Company's ability to
refinance/restructure its existing debt; governmental regulations and
environmental matters; risks associated with regional, national, and world
economies; and consummation of the merger and asset purchase transactions. Any
forward-looking statements should be considered in light of these factors.
Results of Operations
- ---------------------
The Three Months ended October 31, 2002 compared to the Three Months ended
- --------------------------------------------------------------------------
October 31, 2001.
- -----------------
Revenues for the three-month period ended October 31, 2002 decreased 15.4% to
$24.1 million compared with $28.5 million for the three-month period ended
October 31, 2001. Revenues were down from the prior year's first quarter in
every department and in most store locations due to prior year store closures
and the generally soft economy. Revenues for the quarter ended October 31, 2001
included revenues from three stores which were subsequently closed.
The Company's gross profit margin of 14.4% for the three-month period ended
October 31, 2002 was consistent with the prior year comparative period margin of
14.4%. Margins on equipment sales in the current quarter were generally lower
than compared with the prior year period. This was offset by a higher percentage
of revenue generated from parts and service sales, which carry higher gross
margins than rental revenues. Historically, the Company experiences higher gross
margins in the first quarter. This higher gross margin is a result of more high
margin rentals as compared to second and third quarters when more customers
purchase their rental equipment as the end of the calendar year approaches. As
the first fiscal quarter's gross margins are historically the highest quarterly
gross margins for the year, the Company's gross margins in future quarters tend
to be lower.
For the three-month period ended October 31, 2002, selling, general, and
administrative ("SG&A") expenses as a percentage of sales were 9.5%, up from
9.0% for the prior year's quarter reflecting the drop in overall revenue levels
from the prior year.
Interest expense for the three months ended October 31, 2002 of $945,000 was
down from $1,258,000 in the prior year comparative period. This decrease is the
result of reduced overall inventory levels as well as lower average interest
rates and a lower balance on the GE facility.
The Company had net income for the quarter ended October 31, 2002 of $279,000 or
$.07 per share (basic and diluted) compared with a net income of $358,000 or
$0.11 per share (basic and diluted) for the prior year's first quarter.
7
Liquidity and Capital Resources
- -------------------------------
The Company's primary needs for liquidity and capital resources are related to
its inventory for sale and its rental and lease fleet inventories. The Company's
primary source of internal liquidity has been its operations. The Company's
primary sources of external liquidity are equipment inventory floor plan
financing arrangements provided to the Company by the manufacturers of the
products the Company sells, the GE Commercial Distribution Finance, formerly
known as Deutsche Financial Services, ("GE") credit facility, and, with respect
to acquisitions, secured loans from Case Corporation (now CNH Global).
Under inventory floor planning arrangements the manufacturers of products sold
by the Company provide interest-free credit terms on new equipment purchases for
periods ranging from one to twelve months, after which interest commences to
accrue monthly at rates ranging from zero percent to two percent over the prime
rate of interest. Principal payments are typically made under these agreements
at scheduled intervals and/or as the equipment is rented, with the balance due
at the earlier of a specified date or sale of the equipment. At October 31,
2002, the Company was indebted under manufacturer-provided floor planning
arrangements in the aggregate amount of $8,768,000.
The amended GE credit facility matured December 28, 2001 and was a floating rate
facility based on prime with rates between 0.75% under prime to 0.25% over prime
depending on the amount of total debt leverage of the Company. On June 21, 2002,
the Company entered into a Forbearance Agreement with GE under the terms of
which GE raised the interest rate to prime plus 4% while the Company is in
default and required the Company to pay a $45,000 fee to GE for the forbearance.
In addition, under the terms of the Forbearance Agreement, the Company is
required to meet certain financial covenants and meet certain debt reduction
schedules. As of October 31, 2002, the Company was in technical default of the
financial covenants in the GE credit facility. The Company has not received a
waiver of such defaults from GE and although GE has not called the loan, there
is no guarantee that it will not do so in the future.
Borrowings under the GE credit facility are secured by the Company's assets,
including accounts receivable, parts, new equipment, rental fleet, and used
equipment. The Company uses this borrowing facility to provide operating capital
for the Company. As of October 31, 2002, approximately $37,278,000 was
outstanding under the GE credit facility.
The Company currently is in negotiations with GE to extend or renew the credit
facility beyond its current expiration of December 28, 2001. The Company
believes that it can reach agreement with GE to extend or renew the facility on
reasonably acceptable terms. However, in the event that the Company cannot reach
a reasonably acceptable agreement to extend or renew the current GE credit
facility, GE could demand repayment of the entire outstanding balance at any
time. In such case, the Company would be unable to repay the entire GE
outstanding balance. There can be no assurance that the Company will be able to
successfully negotiate an acceptable extension or renewal of the existing GE
credit facility or that GE will not call the balance due at any time.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
During the quarter ended October 31, 2002, cash and cash equivalents remained
the same. The Company had positive cash flow from operating activities in the
first quarter reflecting the net income for the quarter and adding back
depreciation and amortization.
8
The Company's cash and cash equivalents as of October 31, 2002 were $5,000. The
Company cannot fund current levels of operations without the continued
availability of borrowing from its current lender GE. Although the Company and
GE are in negotiations to extend or renew the credit facility beyond its
expiration of December 28, 2001, there can be no assurance that the Company will
be able to successfully negotiate an acceptable extension or renewal of the
expired GE credit facility or that GE will continue to make borrowing available
to the Company.
INVENTORY; EFFECTS OF INFLATION AND INTEREST RATES; GENERAL ECONOMIC CONDITIONS
Controlling inventory is a key ingredient to the success of an equipment
distributor because the equipment is characterized by long order cycles, high
ticket prices, and the related exposure to "flooring" interest. The Company's
interest expense may increase if inventory is too high or interest rates rise.
The Company manages its inventory through Company-wide information and inventory
sharing systems wherein all locations have access to the Company's entire
inventory. In addition, the Company closely monitors inventory turnover by
product categories and places equipment orders based upon targeted turn ratios.
All of the products and services provided by the Company are either capital
equipment or included in capital equipment, which are used in the construction,
industrial, and agricultural sectors. Accordingly, the Company's sales are
affected by inflation or increased interest rates which tend to hold down new
construction, and consequently adversely affect demand for the equipment sold
and rented by the Company. In addition, although agricultural equipment sales
are less than 2% of the Company's total revenues, factors adversely affecting
the farming and commodity markets also can adversely affect the Company's
agricultural equipment related business.
The Company's business can also be affected by general economic conditions in
its geographic markets as well as general national and global economic
conditions that affect the construction, industrial, and agricultural sectors. A
further erosion in North American and/or other countries' economies could
adversely affect the Company's business.
Although the principal products sold, rented, and serviced by the Company are
manufactured by Case, the Company also sells, rents, and services equipment and
sells related parts (e.g., tires, trailers, and compaction equipment)
manufactured by others. Approximately 48% of the Company's net sales for the
three months ended October 31, 2002 resulted from sales, rental, and servicing
of products manufactured by companies other than Case. That compares with a
figure of 51% for the fiscal year ended July 31, 2002. Manufacturers other than
Case represented by the Company offer various levels of supplies and marketing
support along with purchase terms which vary from cash upon delivery to
interest-free, 12-month flooring.
The Company purchases its equipment and parts inventory from Case and other
manufacturers. No supplier other than Case accounted for more than 10% of such
inventory purchases during the quarter ended October 31, 2002. While maintaining
its commitment to Case to primarily purchase Case Equipment and parts as an
authorized Case dealer, the Company plans to expand the number of products and
increase the aggregate dollar value of those products which the Company
purchases from manufacturers other than Case in the future.
The generally soft economic conditions in the equipment market, particularly in
the northwest, have contributed to a decline in equipment sales. A further
softening in the industry could severely affect the Company's sales and
profitability. Market specific factors could also adversely affect one or
9
more of the Company's target markets and/or products. The Company expects the
construction equipment market in its store locations to remain flat or slightly
down over the next 6 to 12 months.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Company is exposed to market risk from changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices such as interest rates. For fixed rate debt, interest rate changes
affect the fair value of financial instruments but do not impact earnings or
cash flows. Conversely for floating rate debt, interest rate changes generally
do not affect the fair market value but do impact future earnings and cash
flows, assuming other factors are held constant. At October 31, 2002, the
Company had variable rate floor plan payables, notes payable, and short-term
debt of approximately $46.2 million. Holding other variables constant, the
pre-tax earnings and cash flow impact for the next year resulting from a one
percentage point increase in interest rates would be approximately $0.5 million.
The Company's policy is not to enter into derivatives or other financial
instruments for trading or speculative purposes.
Item 4. Evaluation of Disclosure Controls and Procedures
------------------------------------------------
(a) Evaluation of disclosure controls and procedures. Our Chief Executive
Officer and our Chief Financial Officer, after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the
"Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, the Company's disclosure
controls and procedures were adequate and designed to ensure that material
information relating to the Company would be made known to them by others within
those entities.
(b) Changes in internal controls. There were no significant changes in the
Company's internal controls or to our knowledge, in other factors that could
significantly affect the Company's disclosure controls and procedures subsequent
to the Evaluation Date.
10
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
As of October 31, 2002, the Company was in technical default
of the financial covenants in the GE Forbearance Agreement.
The Company has not received a waiver of such defaults from GE
and although GE has not called the loan, there is no guarantee
that it will not do so in the future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
-----------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
A. EXHIBITS.
99.1 Certification Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
B. REPORTS ON FORM 8-K.
The Company filed a current report on Form 8-K on December 17,
2002 regarding the Company changing its external auditors.
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN POWER & EQUIPMENT CORP.
December 26, 2002
By: /s/ Mark J. Wright
-------------------------------------
Mark J. Wright
Vice President of Finance and
Chief Financial Officer
12
I, C. Dean McLain, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Western Power &
Equipment Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: December 26, 2002
/s/ C. Dean McLain
- ------------------------------------
C. Dean McLain
President and Chief Executive Officer
13
I, Mark J. Wright, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Western Power &
Equipment Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: December 26, 2002
/s/ Mark J. Wright
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Mark J. Wright
Chief Financial Officer
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